Scientific evidence indicates that schizophrenia is a genetically complex mental disorder. Researchers have characterized up to a million points on the genome to identify those regions related to the disorder. This approach has accounted for a small percentage of the occurrence of schizophrenia and sometimes the genetic predictors derived for schizophrenia also predict bipolar disorder. An alternative approach to clarify the genetic underpinnings of schizophrenia is to simplify the definition of the disorder so it more closely reflects the biological expression of genes that lead to the disorder. Gottesman proposed endophenotypes as useful tools in this regard. An endophenotype is a measurable characteristic unseen by the unaided eye that represents an aspect of the causal path between genes and disease. The potential value of endophenotypes for understanding the basis of schizophrenia has been widely acknowledged; however, their utility has not been fully actualized. Most investigations have failed to thoroughly examine potential endophenotypes in schizophrenia and to date promising indices have been distantly connected to known neural mechanisms of the brain. Thus, only weak links exist between current potential endophenotypes and testable pathophysiological substrates related to gene expression. This study will 1) test visual perceptual abnormalities in schizophrenia against endophenotype criteria, and 2) provide a quantitative model of visual perceptual abnormalities in schizophrenia that derives from experimental findings of neural mechanisms in visual cortex We hypothesize that genetic liability for schizophrenia is specifically associated with errant high- level contextual modulation of vision that can affect early perceptual functions, while schizophrenia itself is additionally associated with a disturbance in the use of low-level context to guide visual perception. Aim 1. Using data from a battery of psychophysical tasks we will a) clarify the nature of abnormal contextual modulation of low-level visual perception in schizophrenia, b) quantitatively model low-level contextual modulation abnormalities in the disorder, and c) test whether problems with low-level visual perception are specific to schizophrenia as compared to bipolar disorder. Aim 2. Using data from psychophysical tasks administered to probands and first-degree biological relatives we will a) determine whether abnormal contextual modulation of low-level visual perception marks genetic liability for schizophrenia, b) apply a quantitative model to test whether there are similar contextual modulation abnormalities in schizophrenia probands and their relatives, and c) determine whether errant contextual modulation of visual perception is specific to genetic liability for schizophrenia as compared to genetic liability for bipolar disorder. Aim3. Using cortical source signals derived from high-density electroencephalogram (EEG) recordings that are constrained by both structural and functional magnetic resonance imaging (MRI) data, we will a) determine the timing and frequency characteristics of neural responses related to abnormal contextual modulation of visual perception found in schizophrenia and in association with genetic liability for the disorder, and b) test whether deviant neural responses during visual perception in schizophrenia can be accounted for by a dysfunction in local divisive normalization.